Can We Have Prosperity Without Growth?

Imagine that you have a steady state society, of 1,000 people. There are no technological advancements, there is no population growth, there is no growth. Each year, 12.5 people are born. Each year, 12.5 people die. The average age of death is 80.

Each year, each person needs to consume 10 widgets to live. Each year, a healthy, working-age person can produce 20 widgets.

This society can clearly sustain itself, as long as each person spends half of their life working. To keep things simple (And to stick it to the DINKs), let's pretend that everyone has children, and is responsible for raising them until they can start working.

How would this society operate?

Well, you'd spend the first 25 years of your life supported by your parent (Who would work for 25 years to support themselves and you). You'd then spend 25 years supporting yourself, and your child. You'd then spend 15 years hoarding widgets, so that you can support your retirement. You'd retire at 65, with 150 widgets in the bank, and die at 80.

Essentially, you spend 40 years of life as a maker (Who can support two people in this time), and 40 years of your life as a taker (Who requires half of a maker's economic output to support them).

Everything works out wonderfully, and nobody needs a pension! Just save all the surplus you make between ages 50 and 65, and retire..! Except that there's two important differences between this abstraction, and the real world.

1. You can't hoard widgets in the real world. Goods have a very limited shelf life. Money gets eaten by inflation.

2. Even if the average age of death is 80, most people aren't average. If you were solely reliant on your personal hoard of widgets (Which was consumed away by spoilage/inflation) to see yourself through old age, you might still run out of widgets, because you happened to live till 83. Or you might have dropped dead two years after you retired - and thus all your savings would go to naught.

Pensions (Or social security, or some other similar instrument) are a solution to this problem. They solve the spoilage and inflation problem, by having your retired life being subsidized by widgets produced today (So they did not drop in value). They solve the 'average person' problem by pooling the risk, so that the very occasional person who happens to live to 90 doesn't go broke. They don't actually require any GDP growth, to work. What they do require is:

1. The same widget created today being more valuable than a 20-year old widget. (Due to spoilage or inflation. If we didn't have spoilage or inflation, we wouldn't need pensions.)

2. Proper levels of funding. The math for # of years worked, and # of years not worked has to add up.

3. There to not be GDP shrinkage. Things get problematic if your gdp or working population shrinks (Whether long-term, or short-term) - in that situation, pensioners have to take a haircut.

Since #1 is a given of the world we live in, and you are not asking about #3, all you need to handle correctly is #2.

No, we could do that with limited growth (of general commerce economy) and just having more resources given to science. Even as a matter of political will (tons of resources in the US e.g. are given to the military which could be use for NASA programs).

We went to space with an 1/10th the economy of today. We had not been to the moon for 40+ years, despite the economy growing ever stronger.

Durable goods obfuscate the issue, but let's take your example.

Let's say I want to have both an all-terrain car for the weekend and my regular car on the weekdays. I now consume two new cars very ten years instead of one. The same number of car has been produced in those ten years (no growth). Where does my extra car come from?

The soil is good but there isn't enough fresh water in most valleys, and the aquifers are heavily fragmented with poor interconnectivity so you can't treat them as one big aquifer. Consequently, there is often local water that isn't connected to any other watershed i.e. if it wasn't used for local agriculture it could not be used at all because it doesn't go anywhere.

The high desert is a good environment for growing many types of high-quality forage, both natural and farmed, so that tends to be what the land is used for. Cattle are raised on natural forage in the summer months and farmed forage in the winter months.

Agriculture is highly adapted to the economics and resources of the local environment. For example, there are parts of the high desert that specialize in onion production, of all things. It makes sense in context.

Let us tell a bit of a story. You bought your two cars because your all-terrain car hobby is very important to you. This was a bit of a financial squeeze and you could not go on holidays as often as you liked. But since the car hobby is more important to you, you think you made the right decision and are happy about it. There is another person who thinks going on holiday is the greatest thing ever. He went on holidays five times last year. This was a bit costly but he decided he did not need a car that badly and could use public transport instead. This was a bit less comfortable but he thought the great experience of going on holidays five times was well worth the inconvenience. So, where did your car come from? It did come from the other person who did not buy a car but went on holidays instead. But both of you were happy with your decisions. No crisis situation or fierce competition is needed in situations where not everybody gets what they want. In fact, both persons might choose to forego a promotion that was offered to them and which would have contributed to economic growth because it would leave the one person with too little time for his car hobby and the other with too little time for this travels.